Daily Stock Market Reports

Why Ford Stock Fell Today


What happened

Shares of Ford Motor Company (F -5.91%) declined by 6% on Monday, following reports that the auto giant was selling some of its shares in Rivian Automotive (RIVN -20.88%).

So what

Ford is reportedly planning to sell 8 million Rivian shares, according to CNBC analyst David Faber. The lockup period for the electric vehicle (EV) maker’s pre-IPO investors expired on Sunday. Ford and other large holders can now freely sell their shares.

Those 8 million shares would be a relatively small portion of the 102 million shares of Rivian that Ford owns. Still, Ford possesses a roughly 12% stake in the EV start-up, and its reported stock sale could be just the first step in the automaker’s plans to reduce its holdings in Rivian. 

Additionally, Faber said JPMorgan Chase had been tasked with selling up to 15 million Rivian shares for an undisclosed seller.

People looking at declining stock charts on computer screens.

Image source: Getty Images.

 

The news stoked fear among investors that a potential wave of selling by Rivian’s largest shareholders could place further pressure on a stock that’s already down over 80% from its highs. 

Now what

Rivian holds an intriguing position within the rapidly expanding EV market. The electric truck maker has an order from Amazon.com (AMZN -5.21%) for as many as 100,000 vehicles. The e-commerce juggernaut views Rivian’s EVs as a key part of its plan to transition its delivery fleet to renewable power sources in the coming years. Amazon, in turn, acquired an 18% stake in the fledgling automaker, and it’s not believed to be planning to unload any of its Rivian shares.

Ford, however, has become more of a competitor than a partner to Rivian in recent months. Ford announced in March its plans to create a separate division focused entirely on the production of electric vehicles. CEO Jim Farley wants Ford to make over 2 million EVs per year by 2026.

Farley’s EV production goals will require billions of dollars in capital expenditures to achieve. Selling its stake in Rivian could go a long way toward raising the cash Ford needs. But Ford’s share sales could further depress Rivian’s stock price, which, in turn, could reduce the amount of capital it can ultimately raise from exiting its position in the EV maker.





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